Govt Asks PSU Banks To Tighten High-value Fixed Deposit Norms

Following reports of frauds at Dena Bank and Oriental Bank of Commerce, the Finance Ministry has asked public sector banks to tighten norms for high-value fixed deposits (FD). As per preliminary forensic audit report, frauds worth Rs 436 crore were committed in these banks.

Banks have been asked to categorise FDs on the basis of their value. Apart from the Finance Ministry, the Reserve Bank of India (RBI) too has asked the banks to tighten lending regulations in order to prevent borrowers from opening multiple current accounts outside their consortium banks.

Kingfisher Airlines had allegedly diverted funds by opening a current account in HDFC Bank, where it had a balance of Rs 7,50,00,000 crore. This fact was concealed from the consortium of lenders headed by the State Bank of India, having a debt of Rs 6,521 crore to Kingfisher Airlines.

A few days ago, the Finance Ministry had ordered forensic audit into some non-performing accounts of UCO Bank to probe alleged irregularities in sanctioning of loans.